The Supreme Court held Monday that plaintiffs in securities fraud class actions are not required to prove loss causation at the class certification stage of the litigation. The unanimous opinion, authored by Chief Justice Roberts, reverses the 2010 decision of the Fifth Circuit Court of Appeals in Erica P. John Fund, Inc. v. Halliburton Co., 597 F.3d 330 (5th Cir. 2010).

Background

Petitioner Erica P. John Fund (the Fund), a purported Halliburton stockholder, alleged that Halliburton made a series of false and misleading statements during a class period from June 1999 to December 2001. The alleged misstatements concerned three separate issues: (i) Halliburton’s asbestos liabilities; (ii) the benefits of Halliburton’s merger with Dresser Industries; and (iii) Halliburton’s accounting decisions regarding certain fixed-price contracts.